The government may ask state-owned Oil and Natural Gas Corporation Ltd. to bear fuel subsidy to help cut petrol and diesel prices, sources said today.
The government does not want to cut excise duty and is looking at alternative means to reduce petrol and diesel prices that had on Tuesday touched an all-time high of Rs 78.43 per litre and Rs 69.31 a litre respectively.
Sources said the alternative in the works is to ask ONGC provide subsidy to fuel retailers to enable them to sell petrol and diesel at below market rates.
Oil producers ONGC and Oil India Ltd. had till June 2015 made good as much as 40 percent of the under-recoveries or subsidy arising out of selling fuel at below market price. The same subsidy sharing in some form is being brought back, they said.
Sources said that meetings to decide on the subsidy sharing mechanism were on and an announcement may come later today.
ONGC Chairman and Managing Director Shashi Shanker, before the news of meeting came to light, said that the company has not heard anything from the government on subsidy sharing.
Petrol and diesel prices have in the last two days have been cut by 8 paisa and 6 paisa a litre, and the government is keen to show a visible reduction which can be possible only if retailers are subsidised.
In the previous subsidy sharing scheme, ONGC sold oil to refiners at a discount.